V.G.Rao Advocate (Advocate) 05 April 2010

Is it a valid promissory note?

Hi all,

A Promissory note is written as Under On a Rs 100 NJS paper with a Heading "PROMISSORY NOTE"

I, Mr X, S/o Mr.Y, R/o Z, OCC: Pvt Service, hereby promise to pay to Mr. M , S/o Mr.N, R/o Hyd, Occ: Pvt Service,

an amount of Rs XXXX which I had received from Mr.M on this 6th day of April 2009. I also agree to pay the aforesaid amount in TWO EQUAL installments of Rs XXXXX each i.e the first installment will be paid on or before 2nd of january 2010 and the second installment will be paid on or before 2nd feb 2010. I also state that I am signing the agreement being in sound state of mind and not under any influence of alcohol, drugs, or any external pressure of any sort.

Witnesses SD/- of EXECUTANT

1. Sd/-

Is it a Valid Promissory note ? if not why and how if any case law is there please provide.

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9 Replies

(Guest)

Strictly or legally speaking, this is not the standard format prescribed by law. However, the lending and borrowing and repayment terms between the parties are clearly mentioned and hence this will be an admissible evidence of the transaction and has an effect of a promissory note (negotiable instrument).

V.G.Rao Advocate (Advocate) 07 April 2010

Dear Gurunarayana Rao garu, with due respect to u, please go through the section 4 of N.I Act .

I need a case law which says that there must not be any condition to pay the amount as in the aforesaid Pronote i.e payment in installments, If there is a condition in the pronote, according to me it changes the charecter of the promissory note., what do u say?

Suryanarayana Tangirala (Advocate) 08 April 2010

Section 4 of N.I.Act recognizes three kinds of promissory notes(1)A promise to pay a certain sum of money to a certain person(2) a promise to pay a certain sum of money to the order of certain person,and(3) a promise to pay the bearer.

When it is not specified in the instrument that the amount is payable on demand or at a specified time and it simply mentioned that payment would be made in few days it is not pronote- AIR 1977 Notes 42(A.P)

The essential feature of a promissory note is an express unconditional promise to pay and it is not enough that the substantial effect of the instrument should be to make the executant liable to pay a sum of money-AIR 1954 sau.52

Suryanarayana Tangirala (Advocate) 08 April 2010

Sir, also refer AIR 1988 Ker 120, AIR 1988 Mad 336

Document acknowledging past liablity with undertaking to pay in instalments with interest in case of failure,and the document to be returned to promisor after full payment,it was held not to be a promisory note-AIR 1953 Pat.131(Read this judgement sir it may help u)

NB:I havent read the judgements but found them in a commentary hope they will help u

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V.G.Rao Advocate (Advocate) 08 April 2010

Thank u Mr. Suryanarayana Tangirala Garu, U have given me worth ful judgments.

mastanrao.bhogadi (advocate) 08 April 2010

Sir the opinion of Sri Suryanarayana Tangirala is absolutely correct on this aspect.

(Guest)

I already put it that it is strictly not a promissory note, but its admissible in evidence of the transaction of lending and borrowing. However, I thank Sarvasri V.G.Rao and Suryanarayana for enlightening with relevant statute and judicial precedents.